Three pension funds, Institutional Shareholder Services and Glass Lewis & Co. have lined up against Chipotle Mexican Grill Inc.'s executive pay package for Steve Ells, chairman of the company's board and co-CEO; Montgomery F. Moran, co-CEO; and two other top executives.
The $183.3 billion California State Teachers' Retirement System, West Sacramento, $178.6 billion Florida State Board of Administration, Tallahassee, and $1 billion American Federation of State, County & Municipal Employees Pension Plan, Washington, will vote against the executive pay in non-binding say-on-pay voting, according to their proxy-vote disclosures.
In addition, they will vote against a binding company proposal amending an employee stock incentive plan. It requires a majority of votes for approval.
CalSTRS and the AFSCME plan will also oppose John S. Charlesworth's election as director. The AFSCME plan will also oppose Mr. Moran's election as director.
CalSTRS and AFSMCE will vote against the ratification of Ernst & Young as Chipotle's accounting firm.
In recommending clients votes against the executive pay plan, an ISS report states, “The company continues to grant large annual awards of stock appreciation rights to executives, who have continued to actively dispose of their shares.” The ISS report noted “required performance goals are not disclosed.”
A Glass Lewis report cites a “disconnect between pay and performance, internal pay inequity” and “insufficient disclosure” of performance goals.
ISS also recommends its clients vote against the stock incentive plan, expressing concern in the report about “a pay-for-performance disconnect driven by multiple years of excessive equity grants.”
The Glass Lewis report calls the incentive plan's cost and share request excessive.
FSBA and Glass Lewis oppose a shareholder proposal calling for the company to issue an annual sustainability report on environmental, social and governance issues. The other pension funds and ISS support the proposal.
In opposing the sustainability disclosure proposal, Glass Lewis states in its report, “we do not believe that the proponent has sufficiently demonstrated that the company's current practices present a threat to shareholder value.”
All the pension funds, ISS and Glass Lewis support a shareholder proposal calling for an end to Chipotle's supermajority vote requirement, such as to change corporate bylaws.
The proposal would enhance shareholder rights, according to ISS and Glass Lewis reports.
Chipotle's annual meeting is May 15.